ECONOMETRICS

Riyandi Saras Anggita

Faculty Economics and Business

University of Brawijaya

February 2018
What is Econometrics ?
“ Econometrics is the use of statistical techniques to understand
economic issues and test theories.
Without evidence, economic theories are abstract and might
have no bearing on reality (even if they are completely rigorous).
Econometrics is a set of tools we can use to confront theory with real-
world data “
• The goal of an applied econometric study might be to test
a hypothesis – for example, to determine how much of
the „gender pay gap‟ can be explained by differences in
education and experience.
• Alternatively, a study could estimate a key parameter,
such as the price elasticity of demand for oil.
• Or econometric techniques could be used to generate
forecasts, like the Bank of Indonesia uses to determine
the level that the base interest rate should be set each
month.
Purpose of this module
• The main focus on the module is to

1. Understand the basic concept of econometrics

2. Understand the method of Ordinary Least Square
(OLS)
3. Understand any of econometrics tools for economic
analysis
4. Understand classic assumption including when it
violates.
Module Outline
• 1. Basic concept of econometrics
• 2. Correlation and regression
• 3. Hypotheses
• 4. Linear regression
• 5. Multiple regression
• 6. Regression model
• 7. Classical assumption :
A. Multicollinearity
b. Autocorrelation
c. Heteroskedasticity
Teaching methods
• 1 lecture per week , focusing mainly on the theory
• Lab classes during the semester , focusing on economic
application using econometric software ( e-views or
STATA)
• Quiz ( Be surprise ! )
• Homework and team work 
• Attending class minimum 80% ( < 80% students are not
allowed to enter final exam)
Recomended reading
1. Gujarati,D. (2004). Basic Econometrics
2. Wooldridge, J.M ( ) . Introductory Econometrics : A
modern Approach, Cengage Learning
3. Wahyudi, S.T (2016) Konsep dan Penerapan
Ekonometrika menggunakan E-views. PT. Rajawali
press: Jakarta
4. Baltagi, B.H (2008). Econometrics. Springer
Advantage of learning this module
• The advantage is to gain the basic intuition behind the

result while seeing the results applied and illustrated

using economic data in a more “hands-on”way.
Opportunities for feedback
• Feedback will be given on the empirical exercise.
• Practice example of exam paper questions and come and
see me during office hours for feedback.

• Contact me :
• - riyandisaras@gmail.com or +62 8787 6863 033
Thank you and see you next week

Cheers !